RealtyTrac: As home prices rise, short sales decline

Higher home prices in South Florida are reducing the need for so-called short sales, new data from RealtyTrac Inc. show.

Short sales accounted for 13.6 percent of all Broward County home sales in October, down from 27.2 percent a year ago, according to the Irvine, Calif.-based foreclosure listing firm.

In Palm Beach County, short sales were 16.6 percent of the market last month, compared with 23.3 percent a year earlier.

In a short sale, a homeowner – with the bank’s permission – unloads for less than what’s owed on the mortgage. It was one of the few options available for struggling homeowners during the housing bust from 2006 through 2011.

But with home prices steadily increasing since early 2012, more South Floridians are regaining lost equity and don’t have to resort to short sales, said Jerron Kelley, a Boca Raton-based foreclosure defense lawyer.

In the third quarter alone, more than 25,000 homeowners in Broward and Palm Beach counties saw their values rise above what they owe, real estate website Zillow.com said last week.

“Some people who were desperately ‘underwater’ on their mortgages now can see the light at the end of the tunnel,” Kelley said Monday.

When the housing market was in shambles, lenders often cut their losses by approving short sales. But now there’s less urgency to sign off on those deals.

“Banks are no longer fearful of catching a falling knife when they foreclose,” said Daren Blomquist, a spokesman for RealtyTrac.